My Lords, in the past decade Britain has experienced a period of remarkable uninterrupted economic growth. We have heard the successes trumpeted many times: low unemployment, low inflation and historically low interest rates. Mortgages were being offered at 125 per cent of a property's value, at six times an applicant's salary. Not surprisingly, house prices escalated, and many householders who had never considered buying a second home decided to take the plunge. Some invested in bricks and mortar because they could not rely on their private pensions; we all know why. Others bought and improved properties with the promise of easy profit. If Harold Macmillan had been alive to witness the past decade he might well have repeated those famous words, "You've never had it so good". Equally, however, being a wise man, he would definitely have asked: "Was this all too good to be true?". We now know the answer to that question. Like the most indulgent guest the morning after a lavish party, we as a nation have woken up with a horrifying hangover, hoping that we will get back to those happy days and the happy state we were in the night before.

All of us, even the Prime Minister, now accept that economic cycles are an unfortunate reality and that, to use my previous analogy, all parties must come to an end. We saw that in the 1970s, we saw it in the 1980s, we saw it in the 1990s, and we are seeing it again today. However, despite this reality, I agree completely with the Secretary of State that it is the duty of Governments to ensure that these economic cycles are tempered as much as possible. As we have just seen, uncontrolled booms can be just as dangerous and damaging as busts, especially if those booms are fuelled—as they were in our case—by record levels of debt. I for one think that it is absolutely hypocritical to blame the Americans for the crisis we are in today. Britain's attitude towards debt in the past decade makes us guilty for the situation in which we find ourselves.

I was pleased to hear in the gracious Speech that the overriding priority of Her Majesty's Government is to ensure stability in the British economy during this global economic downturn. Having started a business from scratch, I know from experience that what businesses desire more than anything else is stability. But business, which had a wonderful relationship with this Government before the current crisis, is now baffled. For example, the Government reduced capital gains tax from 40 per cent to 18 per cent. That should have been applauded as a wonderful move, but we were all surprised by the removal of the 10 per cent taper relief, almost doubling it to 18 per cent. Why did it happen? Because the hedge funds, for example, were misusing the taper relief provision. As a result, the small firms and entrepreneurs who benefited from taper relief were unfairly penalised. That is wrong.

More recently, the Chancellor acknowledged in his Pre-Budget Report that raising corporation tax on small companies was not appropriate. But instead of abolishing this proposed increase, he has merely postponed it. Why? Because some individuals were using the small companies corporation tax to lower their own personal tax. It is the innocent SMEs that will pay the price, and that is wrong.

In seeking to increase national insurance, the Government will increase not only personal taxation but the cost of employing people. Surely the Government should be doing everything they can to incentivise employers to take on more staff, not tax them more for doing so. That is wrong. And the proposed increase in the top rate of tax to 45 per cent has sent alarm bells ringing not just in the UK but around the world.

On the other hand, the Government have magnanimously reduced VAT by 2.5 per cent, at an estimated cost of £12 billion. Surely that sum could have been better and much more effectively targeted by, for example, reducing income tax by a massive 4 per cent. Just as the Government want to prevent the systemic collapse of the banking system, they have a responsibility to prevent the systemic collapse of the SME sector. Only today, the Federation of Small Businesses revealed that 40 per cent of its member businesses said in a survey that they had already considered the possibility of closing down. I am talking about the Government supporting the 5 million SMEs and the 13 million people they employ and their families. The vast majority of SMEs have good business models but, sadly, because of a lack of finance in these awful times, far too many of these companies are being allowed to go to the wall.

The Secretary of State mentioned the establishment of a small business finance scheme, to the tune of £1 billion. I have called many times in this House for the Government to increase multifold the small firm loan guarantee scheme, and yet the Government have come up with a £1 billion fund. Surely that is a drop in the ocean compared with the £700 billion package that is bailing out the banks and the financial sector. Moreover, it is my understanding that, as we heard, the Government have decided to deliver this £1 billion through the banks. But the reality is that the banks still are not lending.

At a time when London is in danger of losing its position as the world's leading global financial centre and Britain's economy is being leapfrogged by that of France, it is more important than ever for the Government to create confidence in the business community. We have all read about the Prime Minister's moral compass, which directs the way in which he executes his public office, but where is the Government's financial compass? What guides them in their relationship with business?

As we are descending into a spiral of almost self-fulfilling doom and gloom, should we be aspiring to revert back to where we were in the decade that I spoke about earlier? No, I do not think that we should be. We need a Government who support not just banks but businesses—which, after all, create the employment that pays the taxes that pay for the public services that we all benefit from. We need an economy that is less dependent on the housing market than on the strength of its skilled workers and the fruits of their productivity and on the strength of its businesses, especially its SMEs.

We need an economy that is supported by sensible saving, sensible lending and sensible borrowing, where our banks and financial systems are supervised and regulated effectively—not with a heavy touch, not with a light touch, but with the right touch. Most importantly, we need an economy that is built on confidence—confidence in the consumer to spend, confidence in the banks to lend, and confidence in the Government, a Government who will always put business first.